Expedia Inc.'s corporate travel business has been a huge disappointment, and the company has failed to jump-start the business since acquiring French corporate travel agencia Egencia in 2004 and rebranding Expedia Corporate Travel as Egencia in 2008.
Egencia -- i.e. Expedia's corporate travel business -- still isn't profitable, but Expedia believes there is huge potential in diversifying beyond its leisure brands and turning a corner with Egencia.
With that in mind, Egencia announced a few days ago that it had signed a slew of global partnerships that will take its presence beyond its current 15 global points of sale and expand its services into Argentina, Hungary, Russia, Romania, United Arab Emirates, Singapore, Taiwan, Hong Kong and Uruguay.
With global expansion a priority, Egencia thus notched partnerships with ATH in Russia, Ibusz in Hungary, Action Travel in Argentina [also with offices in Uruguay], Accent Travel in Romania, Orient Travel in United Arab Emirates, Global Travel Pte in Singapore, Lotus Tours in Hong Kong and Lion Travel in Taiwan.
How Egencia will blend technologies and services with this potpouri of partners is another story, although this sort of rollup of partners is not unusual in corporate travel as global corporate clients require travel management companies to have worldwide footprints.
Early in 2009, Expedia Inc. reorganized its financial reporting around its three primary global brands: Expedia, TripAdvisor and Egencia.
Egencia is the poor stepchild among the three, but indeed there is a huge potential up-side.
Egencia is not yet profitable and has been operating in break-even mode for much of 2009 during the corporate travel swoon.
Expedia's corporate travel business still is small relative to Expedia Inc.'s leisure and media businesses.
For example, Egencia's revenue in the third quarter of 2009 was less than one-third of TripAdvisor's revenue.
Looking at the size of Expedia's corporate business versus its leisure business makes Egencia appear even smaller. Egencia's revenue in the third quarter was about 3.5% of Expedia's leisure revenue.
When Expedia Inc. makes deals with suppliers, it wants to leverage all of its assets: leisure [merchant and retail], advertising/media and corporate travel on a global basis.
Thus, building up Egencia into a worldwide player -- which is a requirement for major corporations -- would have major ramifications for Expedia Inc. The size of the corporate travel market is huge, especially considering all of the new markets opening in Europe and Asia-Pacific.
Expedia Inc. officials have acknowledged publicly that mastering corporate travel was much more difficult than they initially believed, but still think they have a shot with Egencia.
When it comes to competing with traditional travel management companies like BCD or American Express, they have a lot to prove.